Company Secretaries – Know Your Obligations

August, 2012

The modern day company secretary is highly valued by corporations. Although the specific role of a company secretary may vary from corporation to corporation, the office has evolved into much more than simply ensuring compliance with the obligations imposed directly on the company secretary by virtue of the Corporations Act 2001 (Cth) (Act). We set out below a checklist for company secretaries of not-for-profit and charitable organisations.

Role of Company Secretary

(a)   Supporting the Board / Executive Officer to the Board

The role of company secretary often carries a responsibility to ensure that:

In this role, the company secretary is also often the conduit for communication between the directors, members and employees of the company. The Secretary may also:

(b)   Formal role / Administrative Officer

The role of the administrative officer of the company requires the company secretary to:

ASIC

  • be aware of and lodge with ASIC all necessary forms, with the required fee, within the specified timeframe.[2]

 

Governance

  • have a clear understanding of the company’s constitution and the provisions of the Act that affect the company (most of which are set out in this checklist);
  • organise meetings of the board and members (this includes the sending out of notices, the preparation of agendas and running scripts[3], the compilation and distribution of board papers, the marshalling of proxies, and compilation of minutes)[4];
  • be aware of the procedures of meetings, particularly the relevant provisions

of the company’s constitution and replaceable rules regarding such things as quorum requirements, voting procedures, proxy provisions etc so as to be able to advise the chairperson if the need arises;

  • record declarations of interest or conflicts of interest made by directors to a board meeting;
  • ensure you (as company secretary) and all newly appointed directors have signed a consent to their appointment, and retain those consents;
  • comply with the board’s instructions and communicate those instructions to other relevant company officers.

 

Annual General Meeting

  • organise an annual general meeting[5]:
    • within 18 months after its registration; and
    • once every calendar year within five months after the end of its financial year,

(unless you only have one member);

  • prepare a financial report (where required to do so by the Act)[6];
  • have the financial report (if any) reviewed or audited[7];
  • prepare a directors’ report (where required to do so by the Act)[8];
  • give the annual report to any member who elects to receive it in accordance with the timeframes set out in the Act[9];
  • lodge Form 388 with ASIC within 4 months after the end of the financial year.

 

General Administration

  • ensure that the register of members is established and properly maintained (and possibly other registers as well, e.g. register of debentures);
  • maintain the registered office of the company and keep it open to the public;
  • ensure the company’s financial records are kept in accordance with the Act and that the financial reports are prepared in the form and at the time required by the Act and the accounting standards;
  • attend to the company’s insurance requirements (including directors’ and officers’ liability insurance) and ensure the company’s property and assets are properly protected;
  • ensure the execution by all directors and officers and the company of a Deed of Indemnity and Access;
  • coordination of travel and attendance arrangements of directors and of reimbursement (in accordance with board-approved policies) for costs associated with such attendance;
  • generally be conversant with statutory requirements that are relevant to the company’s activities and ensure compliance with them.

Responsibilities to External Institutions

(a)        Australian Taxation Office (ATO)[10]

Depending on the tax status of your company, you will have different reporting requirements to the ATO. You may be required to:

  • lodge tax returns (if a tax paying non-profit);
  • lodge an annual refund of franking credits form (if receiving any franked dividends);
  • lodge an FBT return claiming a rebate or exemption (where available to you);
  • respond to any audit conducted by the ATO; and
  • where your company is an income tax exempt non-profit, or is endorsed as a charity or a deductible gift recipient, advise the ATO if either:
    • the objects clause of the constitution is changed; or
    • the activities of the company change significantly;
      which has the effect of jeopardising the tax endorsements of the company.

(b)   Funding Bodies

If your company is receiving government funding, you must ensure that you are complying with all obligations (including the reporting requirements) of the funding contract.

(c)   Fundraising

Ensuring that your company is complying with all fundraising laws.[11] This may include:

  • applying for a fundraising licence(s);
  • reporting to the relevant government body administering the fundraising laws;
  • ensuring compliance with the relevant fundraising guidelines.

 



[1] The fee will vary depending upon whether your organisation is a public company ($1,069), proprietary company ($226.50) or a special purpose company ($42). A special purpose company is a company that has charitable purposes only and its constitution will require the company to:

(a)   apply its income in promoting those purposes;

(b)    prohibit the company from making distributions to its members and paying fees to its directors; and

(c)     require its directors to approve all other payments the company makes to them.

[2] For example:

(a)   Form 205 – Notification of Resolution – for alteration of constitution (public company only) or change of name – within 14 days of the resolution being passed;

(b)   Form 484 – Change to company details – within 28 days after the date of the change.

[3] In liaison with the Chairperson and the CEO.

[4] You may wish to liaise with the company’s internal General Counsel or external legal advisers to ensure compliance.

[5] The requirement to hold an annual general meeting only applies to public companies.

[6] Small proprietary companies and small companies limited by guarantee have reduced reporting requirements.

[7] Whether a company is required by the Act to review or audit financial reports will depend on the revenue of the company.

[8] Small proprietary companies and small companies limited by guarantee have reduced reporting requirements. Further, depending on the company’s annual revenue, the Act may only require that a streamlined directors’ report be prepared, as opposed to a full directors’ report.

[9] You should ensure that you record any such election; as such an election is a standing election for subsequent financial years. Companies that are not public companies limited by guarantee have a positive obligation to directly notify each member that the member may elect to receive the annual report, free of charge, from the company.

[10] Some of these reporting obligations will be owed to the new Australian Charities and Not for Profits Commission (instead of the ATO), which Commission will commence operation on 1 October 2012.

[11] Each Australian State and Territory has its own fundraising legislation.

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